Apple Without Jobs

Apple pulled a fast one yesterday and left U.S. shareholders holding the bag. By announcing CEO Steve Jobs's departure on indefinite medical leave during a market holiday, American investors couldn't unload their shares like their European counterparts did in droves. Apple was down over 6% in European markets yesterday.

The strategy is Public Relations 101. Announce bad news after hours on a Friday where it'll get swept under the rug or during a market holiday when investors can't demolish your stock. And Apple fully expects to offset the bad news with today's earnings release (the whisper number is a 50% increase in revenue for the quarter). But I think the timing of the Jobs release speaks volumes to how vulnerable Apple feels without his iron fist at the helm.

First of all, let me just get this out there. I'm not an Apple fan by any means, but neither do I wish Steve Jobs any ill will. I hope he has a speedy recovery and gets back to work soon. He's arguably one of the most important inventors and entrepreneurs of the past century, and the world will be the lesser for it whenever we lose his imagination and spirit of innovation.

But I have serious reservations about how Apple will survive in his absence. It's true, Tim Cook took the reins twice already under similar circumstances and did an admirable job. And it falls to him again this time. But let's face it: Tim Cook is no Steve Jobs, and neither is anyone else.

I can't think of another company that large whose image is so closely linked to its founder. Apple and Steve Jobs are inseparable. And it's been that way since the beginning. I grew up in Silicon Valley, and my dad was Wozniak's mailman. Jobs and Woz and the other early Apple crew members used to get drinks at the pizza joint where my dad tended bar at night. Apple and Atari (where Jobs worked before Apple) pretty much ruled the world in Silicon Valley in the late 70's and early 80's.

When Jobs was ousted in 1985, no one there could believe it. He'd already developed such a cult of personality by 1985 that Apple without Jobs was inconceivable. And, sure enough, the company floundered to the brink of bankruptcy until Jobs stepped back in and saved the day in 1997.

In the short term, I think things will be fine. Apple has built enough forced obsolescence into their current suite of products to keep sales robust for probably the next five years. But, assuming for a moment that Jobs doesn't come back, how will the company survive beyond that five-year window? Can they make it without his vision (and, let's face it, iron will)? I'm not optimistic, if for no other reason than I've already seen Apple without Jobs for an extended period of time, and it wasn't pretty.

What do you guys think? Will Android replace the iPhone? Will Jobs's draconian DRM policies be Apple's undoing when he's no longer around to convince the world that's how business should be done? Will today's numbers be enough to offset the inevitable background noise of Jobs's departure?

 

I'm calling it now. The price will dip until about 10:30 or 11 or so as people unwind their positions and the big boys figure they don't want their portfolios having this much volatility. By 1 everyone will realize their should be an earnings report coming out and everyone will buy back in sending the stock to slight gains by the end of the day. By tomorrow morning the stock will spike from the news on the report and then end the day slightly higher than opening.

 
monkeysama:
I'm calling it now. The price will dip until about 10:30 or 11 or so as people unwind their positions and the big boys figure they don't want their portfolios having this much volatility. By 1 everyone will realize their should be an earnings report coming out and everyone will buy back in sending the stock to slight gains by the end of the day. By tomorrow morning the stock will spike from the news on the report and then end the day slightly higher than opening.
haha i second this
 
monkeysama:
I'm calling it now. The price will dip until about 10:30 or 11 or so as people unwind their positions and the big boys figure they don't want their portfolios having this much volatility. By 1 everyone will realize their should be an earnings report coming out and everyone will buy back in sending the stock to slight gains by the end of the day. By tomorrow morning the stock will spike from the news on the report and then end the day slightly higher than opening.

I walked myself though that almost exact scenario yesterday but perhaps slightly down for today. Very interesting situation, both short-term and long.

 
Best Response

I'm convinced that innovation is just as much about attitude as it is about people. When Jobs was forced out of Apple in the '80s, the problem was that there was a huge change of attitude. Instead of innovation, it switched to a corporate culture with a former Coca-Cola CEO as its head.

Today, Jobs' #2 man is a very different person than the management that replaced Jobs in the '80s. He may not have the same design brilliance as Jobs, but he's probably had decades of training at picking out people who do and he wouldn't have lasted under Jobs at that level if he didn't have a great deal of raw talent at it.

Apple without Jobs is still going to be, at bare minimum, as innovative as Google or Amazon. And I think that puts a real bottom into the stock. Naturally, I hope Jobs recovers.

 

Well, I dislike Apple. I will get that bias out of the way early. I find Apple to be a necessary evil and have no problem making fun of it for the hipsterness of the products they offer. I agree with the limited lifespan of their products and only deal with buying their products when I have to (like when my iPod died and I needed to replace it). I don't own more than what I need to by them, as I dislike the extremely closed nature of Apple computers.

That said, and Bias aside, I gotta agree with IP. The fact is, while Jobs may be the spiritual head of Apple, he's smart enough to put enough people in place with the creative and corporate warewithall to continue running Apple successfully. Unlike when he was ousted in '85, when the firm brough in an outsider, this time around, Jobs has been able to pick and choose who he wants in strategic locations in order to continue the strategic vision of Apple. He's chosen people who can continue to innovate and run the firm in his absense.

Firms can survive without their "Visionary" leader. It's a matter of finding new ways to be creative and innovative. Eventually, Apple will need to take its cue from another Steve Jobs investment. Back in 1986, just after Jobs had been fired from Apple, he invested money in a small company that he bought from George Lucas. Now, this company didn't start making serious money, and ever since November 22, 1995, it has been a creature capable of turning everything it makes into gold. It went public during the Tech Boom (and is now private) and the rest is history. Everything they have done has been greated with fanfare and sheer awesomeness. Now, the reason why I mention this company without discussing the name is because this particular company isn't something you'd think of normally, and Apple, in my opinion, will fall more into the model of this investment now owned by Disney.

For those of you unaware of the company in question, I'm talking about Pixar. Pixar's spiritual head, John Lasseter, has, since the release of Toy Story 2 in November, 1999, let others take the reins and run with it, creating a number of successful films its wake. While Lasseter may be the Executive Producer, he has given every single person tasked with directing a film full control of their projects in order to create something that lives up to the Pixar Name.

This is where I see Apple heading, particularly once Jobs finally retires from all of the day to day rigors of running an company. He's put in place enough people to succeed, and while he is gone, hopefully they are given enough room to create and innovate unencumbered by Jobs' iron will. It's a matter of keeping with his vision, and I think they will keep with it. It's just a matter of where do they go from here. Innovation will eventually happen without Jobs, so they need to start letting it happen freely while he is on leave in order to begin to sprout the seeds of their future.

And Eddie, no, I don't see the iPhone as beating the Android. Then again, I happen to think that the Android is the better of the two phones because it's software is hardware agnostic, allowing for companies to create what they want in order to maximize use of the OS, much like the old standard that Nokia released in Symbian OS years ago.

 

Frieds,

Lest we forget, there was always NeXT Computers. Pretty much a dud (though it was the first Internet web server EVER, and Tim Berners-Lee DID use a NeXT to develop the Internet). He didn't get into Pixar until '91 or so, if I recall. Not that he's not unnervingly gifted, I'm just pointing out that everything he's done hasn't been a winner.

EDIT: Just realized how douchey it sounds to be busting on a sick guy who invented the machine that led to the very medium upon which we're communicating, whether or not it was a commercial success. My apologies.

 

I think that consistently making good movies like Pixar and coming up with new technology like Apple are two different things. It is much more difficult to sustain Apple's success than Pixar's in my opinion. I think it's only a matter of time before another company comes out with an iPod-like invention that propels them onto the big stage.

 

Eddie,

Jobs bought Pixar in 85 from Lucas. He made his second investment in 91, during the NeXT debacle and while Renderman was being developed. And you're right, Pixar wasn't a winner off the bat. It was with the release of Toy Story (and Renderman, on the software side) in November of 1995 that turned the company around. The fact is though, creativity and innovation are something that need to happen naturally and having the leader step back (much like Lasseter at Pixar) and let other try to sink or swim in a culture that fosters creative growth. Jobs won't be there forever and should take a page form Lasseter's book.

NVO,

I don't know about that. Just because Pixar makes movies, doesn't mean they are not innovating while making movies. You look at every single film that Pixar did and it's a new and innovative way to solve a problem. Innovation takes many forms, but the point is that if Lasseter had been left in charge of every single project, Pixar's streak of hits, his sanity and what we expect from them would be fairly muted in comparison to what we see today.

Pixar's innovation all has to do with things we don't see that occur during the filmmaking process and find visually appealing in the end product. Pick any film you want by them, and they have produced new technology and software to go beyond what is currently capable. This is why their Renderman Suite is considered the the standard for any digital animation work, and Pixar still develops even newer tools to deal with the complex problems of something that we would consider as innocuous as moving hair or the fluid motion of water. If one man had been in charge of all this, the company would have folded years ago.

The point is that one man can't solve all the creative problems in a firm and that it's a collaberative effort to continually innovate and create. Jobs is putting together the pieces and should work to grow the Apple by stepping back and letting others have a go at it. He won't be around and won't always be there for new innovation. Hopefully this break will give him an opportunity to let others try and succeed at Apple without his "iron fist" leadership yet still be true to the Apple vision.

 

I'm pissed. Around 6 hours ago, I wrote a post that was very similar to what Illiniprogrammer wrote (essentially, what was true for the 80s, when Jobs was ousted by a cashmere-sweater-wearing sugared water executive) is not true for today. Apple is now a company run in Jobs' likeness. He's emblematic, yes, but I think they've truly managed to make Apple his legacy - Steve Jobs manifested as an "Inc".

The truth is you're the weak. And I'm the tyranny of evil men. But I'm tryin', Ringo. I'm tryin' real hard to be the shepherd.
 

Apple stock is still pretty cheap at 15 times earnings. Everyone was worried about the company the last time he took time off, and in all likelihood he's got the best treatment money can buy. I'm still holding.

Metal. Music. Life. www.headofmetal.com
 

About an hour or so ago, a contributor on CNBC made a good point: If today Apple was on iPad version 5.0, i.e. the situation they are currently running into with growth in the iPod product line, there should be concern about "okay, well what is next, what will be the next great innovation from Steve Jobs and Apple? If he leaves now, how will that affect the company's future?" However, since the iPad is still relatively new and the iPhone is only at about the middle of its growth stage (who knows how the Verizon situation will pan out), Apple still appears to be unable to do any wrong. With Lion OS on the horizon, upgraded macbook / mac products / processors in the works for 2011, and a growing loyal following, things are still looking pretty rosy. They just smashed estimates after the close, so hey, lets just focus on hoping Jobs can get healthy soon...

 

Two words: Jonathan Ive. As long as he is there and somebody can sell, I believe its gonna be alright. I dont like the products, but the company is pretty solid.

Valor is of no service, chance rules all, and the bravest often fall by the hands of cowards. - Tacitus Dr. Nick Riviera: Hey, don't worry. You don't have to make up stories here. Save that for court!
 

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